Obama Criticizes Tax-Exempt Pro-Republican Groups

October 11, 2010

The President is ramping up complaints against attack ads funded by Republican-leaning groups with undisclosed donors

(Bloomberg) — President Barack Obama is stepping up criticism of tax-exempt Republican-leaning groups using undisclosed donations to fund "attack ads" less than a month before congressional elections, a complaint his opponents call baseless.

"It could be the oil industry" funding the ads, Obama told a Democratic rally yesterday in Philadelphia. "It could be the insurance industry, it could even be foreign-owned corporations.

You don't know because they don't have to disclose." Democrats have spent weeks rebuking pro-Republican outside groups that are flooding the airwaves with tens of millions of dollars worth of political advertising before the Nov. 2 midterm elections. A new ad from the Democratic National Committee says the U.S. Chamber of Commerce may be taking "secret foreign money to influence our elections," a charge the business group denies.

Earlier yesterday, senior Obama adviser David Axelrod singled out the Chamber over its sources of donations. "If the Chamber opens up its books and says here's where our political money's coming from," Axelrod said on CBS's "Face the Nation" program, "then we'll know. But until they do that, all we have is their assertion."

The Democrats' approach is "pure partisan posturing," said David Primo, a political science professor at the University of Rochester in New York.

'Easy Target'

"The Democrats are on the defensive and think the Chamber is an easy target," Primo said. "I don't think it will resonate with voters, who are more concerned with the economy and runaway government spending."

The latest rhetoric may complicate an already tense relationship between the White House and the business community. The Bloomberg Global Poll last month found 77 percent of U.S.-based Bloomberg subscribers say Obama is too anti-business, and his favorability among the 1,408 investors worldwide is down to 49 percent from 73 percent in July 2009.

"It is a high-risk strategy," said Julian Zelizer, a history and public affairs professor at Princeton University in New Jersey. "The Chamber has a lot of money and influence. The voters who might be mobilized by these attacks are pretty demoralized by unemployment. He could end up energizing his opponents rather than his supporters."

While Obama didn't name any groups at the rally, he said political ads paid for by undisclosed donors are "a threat to our democracy."

DNC Ad

The DNC ad, a portion of which was broadcast during the "Face the Nation" program, described the Chamber as "shills" for big business who are "stealing our democracy." "The ad is ridiculous and false," Tom Collamore, senior vice president of communications and strategy for the Chamber, said in an e-mail. Collamore called the ad "a blatant attempt to avoid a serious discussion of Americans' top priority — creating jobs and growing the economy."

The Chamber, the nation's largest business lobbying group, has pledged to spend $75 million backing pro-business candidates this year. Last week, it reported $1 million ad campaigns against Senator Barbara Boxer of California and Senate candidate Paul Hodes in New Hampshire, both Democrats.

The dueling advertising campaigns are among increasingly hostile exchanges between Democrats and the Chamber. Last week, Chamber President Tom Donohue said in a speech in Iowa that the Obama administration is imposing regulations that are "suffocating the entrepreneurial spirit."

The DNC ad also targets Crossroads GPS, a group advised by Republican strategist Karl Rove and former Republican National Committee Chairman Ed Gillespie. Because it's set up as an issue-advocacy group, Crossroads GPS doesn't have to disclose its donors.

'Benign Names'

"Ed Gillespie and Karl Rove run one of them — tens of millions of dollars from undisclosed donors, under benign names like the American Crossroads fund," Axelrod said. "Why not simply disclose where this money is coming from?"

Neither Rove nor Gillespie is on the board or staff of Crossroads GPS or its sister group, American Crossroads, though they helped conceive of the groups and raise money for them. American Crossroads does disclose its donors. Rove, appearing on "Fox News Sunday," said the DNC ad accuses him and Gillespie of "a criminal violation of our law by getting foreign money and spending it on American political campaigns, and they have not one shred of evidence to back up that baseless lie."

Rove called it "a desperate and, I think, disturbing trend by the president of the United States to tar his political adversaries with some kind of — you know, enemies list, with being — unrestrained by any facts or evidence."

$52 Million

American Crossroads and Crossroads GPS together plan to spend $52 million on the elections. Among the Democrats they've targeted are Senate Majority Leader Harry Reid in Nevada and Democratic Senate candidates Jack Conway in Kentucky and Robin Carnahan in Missouri, American Crossroads reported raising $2.6 million in August, helped by $1 million donations from two Texas businessmen, Trevor Rees-Jones and Robert Rowling, and $400,000 from insurer American Financial Group Inc. of Cincinnati. Other, undisclosed, donations are flowing into Crossroads GPS; the two groups together reported raising at least $32 million as of Sept. 20.

Gillespie is chairman of the Republican State Leadership Committee, another campaign advocacy group that tries to elect Republicans and which discloses its donors. Among its biggest contributors are Indianapolis-based health insurer WellPoint Inc. and Winston-Salem, North Carolina-based tobacco company Reynolds American Inc.

Countering Unions

Part of the impetus for forming new outside groups was to counter the weight of unions and Democratic-leaning issue groups that spent about $400 million to help Obama win in 2008, Gillespie said on "Face the Nation" yesterday. Unions also don't have to disclose most individual donations, though their money comes predominantly from members' dues.

"We didn't hear Mr. Axelrod or others complaining about that much of that money was undisclosed," Gillespie said. Republicans need a net gain of 39 seats to get a majority in the 435-member House of Representatives. The nonpartisan Cook Political Report in Washington forecasts Republicans will win at least 40 seats in the election. In the Senate, where Republicans hold 41 of 100 seats, the Cook report says they are poised to pick up from seven to nine seats.

Targeting 'Pledge'

Obama yesterday repeated a charge he's made against the Republicans' "Pledge to America" platform, seeking link it to special interests.

"It turns out that the 'Pledge' was written by a former lobbyist for AIG and Exxon Mobil," Obama said. The St. Petersburg Times reported Oct. 2 that the pledge was written by Brian Wild, a Republican House staffer who formerly lobbied for American International Group Inc. and Exxon Mobil Corp. Wild worked for the Nickles Group, a Washington-based consulting firm whose chairman is former Senator Don Nickles, an Oklahoma Republican.

Wild was the executive director of the "Pledge" project and didn't write it, Brendan Buck, a spokesman for Republican group that drew up the "Pledge," said in a telephone interview.

"There were a lot of staffers involved and he helped coordinate it and kept the trains running," Buck said. The pledge "was a collaborative effort" of the Republican leadership. Buck said Wild no longer works for the Nickles Group, has no affiliation with his former clients, and won't be available for comment. He's now on House Minority Leader John Boehner's staff.

As late as the third quarter of 2008, the Nickles Group listed Wild as one of the lobbyists working on its AIG account. The group reported $60,000 in lobbying for AIG that quarter. Wild was also listed as one of the Nickles Group lobbyists working for Exxon as late as the first quarter of 2010. Other clients while at Nickles included the telecommunications provider Comcast Corp. and drugmaker Bristol-Myers Squibb Co., according to lobbying disclosure reports filed with the Senate.

The automated phone directory at Nickles still lists an extension for Wild. Phone messages and an e-mail to the firm weren't immediately returned.